YRC Worldwide Reports Record Quarterly Revenue and Earnings
OVERLAND PARK, Kan., Oct. 26 /PRNewswire-FirstCall/ -- YRC Worldwide Inc. (Nasdaq: YRCW) today announced third quarter 2006 adjusted diluted earnings per share ("EPS") of $1.72, a 12% increase from third quarter 2005 adjusted EPS of $1.53. Third quarter 2006 adjusted EPS excludes $.08 related to reorganization expenses, a loss on sale of a subsidiary, and net losses on property disposals. The company does not consider these costs a part of core operations and excludes them when evaluating ongoing performance. Reported EPS for third quarter 2006 was $1.64 compared to reported EPS of $1.42 in third quarter last year.
"We delivered a solid quarter with record revenue and earnings per share," stated Bill Zollars, Chairman, President and CEO of YRC Worldwide. "Our operating companies continued to execute well while effectively reducing the cost base."
YRC Worldwide reported the following consolidated results for the third quarter 2006:
- Record quarterly operating revenue of $2.57 billion compared to third quarter last year of $2.49 billion.
- Adjusted operating income of $185 million compared to third quarter 2005 adjusted operating income of $168 million, an increase of 11%. Adjustments in 2006 related to reorganization expenses, a loss on sale of a subsidiary, and net losses on property disposals. Reported operating income was $178 million compared to reported operating income of $157 million in 2005.
For the nine months ended September 30, 2006, YRC Worldwide reported the following consolidated results:
- Adjusted diluted EPS of $4.06 compared to $3.88 for the same period last year. Reported diluted EPS of $3.92 compared to $3.77 for the same period in 2005.
- Operating revenue of $7.51 billion, up 20% from the same period last year.
- Adjusted operating income of $451 million compared to $392 million for the nine months ended September 30, 2005, an increase of 15%. Adjustments in 2006 related to reorganization expenses, a loss on sale of a subsidiary, and net losses on property disposals. Reported operating income was $438 million compared to reported operating income of $383 million in 2005.
During the quarter, the company recorded $16 million of expense related to insurance claims, based primarily on deterioration in prior years' workers' compensation claims. The company also had lower depreciation expense of $12 million. As part of the company's synergy initiatives, practices are being implemented that more effectively utilize equipment across multiple business units for a longer period of time. Depreciation policies were therefore adjusted on a prospective basis.
Please note the 2006 results include the USF companies for the entire period. The 2005 results include the USF companies from the date of the company's acquisition of USF Corporation on May 24, 2005.
For statistical information, refer to the company's website at yrcw.com under Investor Relations and then select Earnings Releases & Operating Statistics.
Outlook
"We have been pleased with the solid results our business units have delivered so far in 2006," Zollars stated. "With that said, the economy is growing at a much slower pace and we believe that will impact our earnings growth in the fourth quarter."
The company's expectations include the following:
- Full year 2006 EPS between $5.45 and $5.55, implying fourth quarter EPS of $1.40 to $1.50.
- Full year 2006 consolidated revenue of about $10 billion, interest expense around $90 million and a consolidated income tax rate of 38.3%.
- Diluted average shares of around 58.5 million.
- 2006 gross capital expenditures of about $385 million.
Review of Financial Results
YRC Worldwide (Nasdaq: YRCW) will host a conference call for the investment community on Friday, October 27, 2006, beginning at 9:30 a.m. ET, 8:30 a.m. CT.
Investors and analysts should dial 1.888.609.3912 at least 10 minutes prior to the start of the call. The conference ID number is 7484957. The conference call will be open to listeners through a live webcast via StreetEvents at streetevents.com and via the YRC Worldwide Internet site yrcw.com.
An audio playback will be available beginning two hours after the call ends until midnight on November 10, 2006, by calling 1.800.642.1687 and then entering the access code 7484957. An audio playback also will be available for 30 days after the call via the StreetEvents and YRC Worldwide web sites.
The preceding disclosures contain references to 'reported' and 'adjusted' operating income and earnings per share. Reported numbers include property gains and losses, reorganization expenses, acquisition charges, and a loss on sale of subsidiary, while adjusted numbers exclude these items. Management adjusts for these items when evaluating operating performance to more accurately compare the results among periods.
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words "expect", "believe" and similar expressions are intended to identify forward-looking statements. It is important to note that the company's actual future results, revenue and earnings per share could differ materially from those projected in such forward-looking statements because of a number of factors, including (without limitation), inflation, inclement weather, price and availability of fuel, sudden changes in the cost of fuel or the index upon which the company bases its fuel surcharge, competitor pricing activity, expense volatility, including (without limitation) expense volatility due to changes in rail service or pricing for rail service, ability to capture cost reductions, including (without limitation) those cost reduction opportunities arising from acquisitions, a downturn in general or regional economic activity, changes in equity and debt markets, effects of a terrorist attack, and labor relations, including (without limitation), the impact of work rules, any obligations to multi-employer health, welfare and pension plans, wage requirements and employee satisfaction.
The company's expectations regarding its interest expense are only its expectations regarding this expense. Actual interest expense could differ based on a number of factors including (among others) the company's revenue and profitability results and the factors that affect revenue and results described above, the amount, character and interest rate on the company's outstanding debt and any financings the company may enter into in the future.
The company's expectations regarding its effective tax rate are only its expectations regarding this rate. The actual rate could differ based on (among others) the following factors: variances in pre-tax earnings on both a consolidated and business units basis, variance in pre-tax earnings by jurisdiction, impacts on our business from the factors described above, variances in estimates on non-deductible expenses, tax authority audit adjustments, change in tax rates and availability of tax credits.
The company's expectations for the amount of its diluted average shares are only its expectations regarding this amount. Actual diluted average shares could differ based on a number of factors including (among others) the number of employee and director stock option exercises, actual amounts of stock awarded to employees and directors during the year, the dilutive impact of the contingent convertible notes based on the company's average stock price, and any unanticipated issuance of stock for currently unplanned financings or acquisitions.
The company's expectations regarding its gross capital expenditures are only its expectations regarding these expenditures. Actual expenditures could differ based on (among others) the following factors: impacts on our business from the factors described above, the accuracy of our estimates of our spending requirements, the occurrence of any unanticipated acquisition opportunities, changes in our strategic direction, the need to spend additional capital on cost reduction opportunities, and the need to replace any unanticipated losses in capital assets.
YRC Worldwide Inc., a Fortune 500 company and one of the largest transportation service providers in the world, is the holding company for a portfolio of successful brands including Yellow Transportation, Roadway, Reimer Express, Meridian IQ, New Penn, USF Holland, USF Reddaway, USF Bestway, and USF Glen Moore. The enterprise provides global transportation services, transportation management solutions and logistics management. The portfolio of brands represents a comprehensive array of services for the shipment of industrial, commercial and retail goods domestically and internationally. Headquartered in Overland Park, Kansas, YRC Worldwide employs approximately 70,000 people.
STATEMENTS OF CONSOLIDATED OPERATIONS
YRC Worldwide Inc. and Subsidiaries
For the Three and Nine Months Ended September 30
(Amounts in thousands except per share data)
(Unaudited)
Three Months Nine Months
2006 2005 2006 2005
OPERATING REVENUE $2,571,087 $2,491,650 $7,511,027 $6,258,457
OPERATING EXPENSES:
Salaries, wages and
employees' benefits 1,478,622 1,450,548 4,340,435 3,721,462
Operating expenses and
supplies 459,738 412,949 1,378,087 1,002,998
Purchased transportation 277,848 274,568 811,752 686,552
Depreciation and
amortization 64,118 75,800 212,280 180,848
Other operating expenses 105,288 110,147 317,754 274,272
(Gains) losses on
property disposals, net 2,427 1,638 83 (346)
Loss on sale of
subsidiary,
reorganization and
acquisition charges 5,455 9,213 12,936 10,077
Total operating
expenses 2,393,496 2,334,863 7,073,327 5,875,863
OPERATING INCOME 177,591 156,787 437,700 382,594
NONOPERATING (INCOME)
EXPENSES:
Interest expense 23,025 19,949 66,684 42,753
Other (677) (943) (2,036) (1,488)
Nonoperating expenses,
net 22,348 19,006 64,648 41,265
INCOME BEFORE INCOME TAXES 155,243 137,781 373,052 341,329
INCOME TAX PROVISION 59,458 52,496 142,879 130,046
NET INCOME $95,785 $85,285 $230,173 $211,283
AVERAGE SHARES
OUTSTANDING-BASIC 57,464 57,994 57,434 53,177
AVERAGE SHARES
OUTSTANDING-DILUTED 58,396 60,194 58,718 56,018
BASIC EARNINGS PER SHARE $1.67 $1.47 $4.01 $3.97
DILUTED EARNINGS PER SHARE $1.64 $1.42 $3.92 $3.77
SUPPLEMENTAL FINANCIAL INFORMATION
YRC Worldwide Inc. and Subsidiaries
For the Three Months Ended September 30
(Amounts in thousands except per share data)
(Unaudited)
Three Months
2006 2005 %
Operating revenue:
Yellow Transportation $898,807 $892,451 0.7
Roadway 900,182 858,353 4.9
YRC Regional Transportation 624,727 606,543 3.0
Meridian IQ 153,737 142,027 8.2
Corporate and other (6,366) (7,724)
Consolidated 2,571,087 2,491,650 3.2
Reported operating income (loss):
Yellow Transportation 68,715 73,464 (6.5)
Roadway 59,444 58,255 2.0
YRC Regional Transportation 48,070(a) 27,766 73.1
Meridian IQ 850 6,314 (86.5)
Corporate and other 512(a) (9,012)
Consolidated 177,591 156,787 13.3
Adjustments to operating income by
segment(b):
Yellow Transportation 262 (321)
Roadway 1,737 1,855
YRC Regional Transportation 109 5,104
Meridian IQ 5,455 (11)
Corporate and other 319 4,224
Consolidated 7,882 10,851
Adjusted operating income (loss):
Yellow Transportation 68,977 73,143 (5.7)
Roadway 61,181 60,110 1.8
YRC Regional Transportation 48,179 32,870 46.6
Meridian IQ 6,305 6,303 -
Corporate and other 831 (4,788)
Consolidated $185,473 $167,638 10.6
Reported operating ratio:
Yellow Transportation 92.4% 91.8%
Roadway 93.4% 93.2%
YRC Regional Transportation 92.3% 95.4%
Meridian IQ 99.4% 95.6%
Consolidated 93.1% 93.7%
Adjusted operating ratio:
Yellow Transportation 92.3% 91.8%
Roadway 93.2% 93.0%
YRC Regional Transportation 92.3% 94.6%
Meridian IQ 95.9% 95.6%
Consolidated 92.8% 93.3%
Reconciliation of reported diluted
earnings per share (EPS) to adjusted
diluted EPS:
Reported diluted EPS $1.64 $1.42
Losses on property disposals 0.02 0.02
Reorganization expenses 0.03 -
Loss on sale of subsidiary 0.03 -
Acquisition charges - 0.05
Executive severance - 0.04
Adjusted diluted EPS $1.72 $1.53
SUPPLEMENTAL FINANCIAL INFORMATION
YRC Worldwide Inc. and Subsidiaries
For the Nine Months Ended September 30
(Amounts in thousands except per share data)
(Unaudited)
Nine Months
2006 2005 %
Operating revenue:
Yellow Transportation $2,625,165 $2,534,769 3.6
Roadway 2,582,298 2,455,992 5.1
YRC Regional Transportation 1,870,838 986,447(c) 89.7
Meridian IQ 447,184 294,078(c) 52.1
Corporate and other (14,458) (12,829)
Consolidated 7,511,027 6,258,457 20.0
Reported operating income (loss):
Yellow Transportation 166,589 190,782 (12.7)
Roadway 154,975 146,522 5.8
YRC Regional Transportation 123,080(a) 55,656(c) 121.1
Meridian IQ 6,064 10,922(c) (44.5)
Corporate and other (13,008)(a) (21,288)
Consolidated 437,700 382,594 14.4
Adjustments to operating income by
segment(b):
Yellow Transportation 2,056 (2,833)
Roadway 1,586 2,352
YRC Regional Transportation (156) 5,475
Meridian IQ 6,968 (11)
Corporate and other 2,565 4,748
Consolidated 13,019 9,731
Adjusted operating income (loss):
Yellow Transportation 168,645 187,949 (10.3)
Roadway 156,561 148,874 5.2
YRC Regional Transportation 122,924 61,131 101.1
Meridian IQ 13,032 10,911 19.4
Corporate and other (10,443) (16,540)
Consolidated $450,719 $392,325 14.9
Reported operating ratio:
Yellow Transportation 93.7% 92.5%
Roadway 94.0% 94.0%
YRC Regional Transportation 93.4% 94.4%
Meridian IQ 98.6% 96.3%
Consolidated 94.2% 93.9%
Adjusted operating ratio:
Yellow Transportation 93.6% 92.6%
Roadway 93.9% 93.9%
YRC Regional Transportation 93.4% 93.8%
Meridian IQ 97.1% 96.3%
Consolidated 94.0% 93.7%
Reconciliation of reported diluted
EPS to adjusted diluted EPS:
Reported diluted EPS $3.92 $3.77
(Gains) losses on property disposals - -
Reorganization expenses 0.11 -
Loss on sale of subsidiary 0.03 -
Acquisition charges - 0.07
Executive severance - 0.04
Adjusted diluted EPS $4.06 $3.88
(a) Amounts related to USF Dugan and USF Red Star, which were shut down in
previous periods, have been classified in 'Corporate and Other' for
2006. The 2005 amounts continue to be classified in YRC Regional
Transportation.
(b) Management excludes these items when evaluating operating income and
segment performance to more accurately compare the results of our core
operations among periods. Adjustments presented in the 2006 period
herein consist of property gains and losses, reorganization charges
and loss on sale of subsidiary. Adjustments presented in the 2005
period herein consist of property gains and losses, acquisition
charges and executive severance charges.
(c) Includes the revenue and operating income of USF operating companies
since May 24, 2005, the date of acquisition.
Selected Financial Data
YRC Worldwide Inc. and Subsidiaries
(Amounts in thousands unless otherwise noted)
(Unaudited)
For the Nine Months Ended September 30,
2006 2005
Net cash from operating activities $299,051 $256,336
Net cash used in investing activities (302,063) (1,011,366)
Net cash (used in) provided by
financing activities (9,385) 706,015
Gross capital expenditures (319,743) (231,644)
Net capital expenditures (284,673) (213,278)
Proceeds from exercise of stock
options 4,294 4,293
Free cash flow(a) 18,672 47,351
September 30, December 31,
2006 2005
Cash and cash equivalents $69,964 $82,361
Accounts receivable, net 1,331,416 1,164,383
Net property and equipment 2,297,886 2,205,792
Total assets 6,033,286 5,734,189
Asset backed securitization
borrowings 425,000 374,970
Long-term debt, less current portion 1,062,204 1,113,085
Total debt 1,487,204 1,488,055
Total shareholders' equity 2,172,250 1,936,488
Debt to capitalization(b) 40.6% 43.5%
Debt to capitalization, less cash 39.5% 42.1%
(a) Management uses free cash flow as an indication of the cash available
to fund additional capital expenditures, to reduce outstanding debt
(including current maturities), or to invest in our growth strategies.
Free cash flow is calculated as net cash from operating activities
plus stock option proceeds less net capital expenditures. This
measurement is used for internal management purposes and should not be
construed as a better measurement than net cash from operating
activities as defined by generally accepted accounting principles.
(b) We calculate debt to capitalization as total debt divided by total
debt plus total shareholders' equity.
SOURCE: YRC Worldwide Inc.
CONTACT: Investors, Phil J. Gaines of YRC Worldwide, +1-913-696-6108,
phil.gaines@yrcw.com , or Media, Suzanne Dawson of Linden Alschuler & Kaplan,
+1-212-329-1420, sdawson@lakpr.com
Web site: http://www.yrcw.com